Jerry, a Partner in the JSK Partnership, Begins the Year

question 39

Multiple Choice

Jerry, a partner in the JSK partnership, begins the year on January 1, 2021 with a capital balance of $20,000. The JSK partnership agreement states that Jerry receives 6% interest on his monthly weighted average capital balance without regard to normal drawings. Each partner draws $5,000 in cash from the business every quarter. Any withdrawal in excess of that will be accounted for as a direct reduction of the partner's capital balance.On March 1, 2021, when the partnership tax return for 2020 was completed, Jerry's capital account was credited for his share of 2020 profit of $120,000.Jerry withdrew $5,000 quarterly, beginning March 31st.On September 1, Jerry's capital account was credited with a special bonus of $60,000 for business he brought to the partnership.What amount of interest will be attributed to Jerry for the year 2021 that will go toward his profitdistribution for the year?

• A) $6,000.
• B) $6,250.
• C) $7,950.
• D) $8,400.
• E) None of these answer choices is correct.

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Definitions:

Peek-A-Boo

A game played with young children that involves alternately hiding and revealing the face to entertain or pleasantly surprise the child.

Secure Attachment

A healthy emotional bond that forms between a child and caregiver, characterized by trust and a sense of safety.

Strange Situation

A procedure developed in psychology to observe attachment relationships between a caregiver and child.

Wary

Being cautious and alert to potential dangers or problems; having a sense of carefulness.